Mergers & Aquistions

Question 1

Mergers def

Answer 1

Combination of two or more companies to form a new company, often takes on new corporate identity .

Horizontal - same stage firm of same industry merge

Vertical – (upstream, or downstream) different stage firm of same industry merge

Conglomerate - firms in unrelated industries Merge

Question 2

Acquisitions def

Answer 2

Purchase of a company by another company or buy an investor group. Hostile takeover goes against wishes of the target companies management, and board of directors. (Going to the shareholders and bribing them for their share instead of going to management, then the board is filled with people in favour of acquisition)

Question 3

Ansoff matrix: market penetration

Answer 3

Grow by selling more of ur existing products to current markets.

Do by:
- entice customers away from competition; aggressive price, marketing

• encourage existing customers to be more frequent users: loyalty points
• acquire a competitor; market share

Question 4

Ansoff matrix: market development

Answer 4

Existing products to new markets (new customer segments, new oversees markets)

Do by:
- enter new territories (launch in new country)
- creating new product dimensions (sizes, packaging)
- new distributing channel (face-face store opening online shop)
- create products targeted at different market segments (same product packaged to appeal different genders or ages)

Question 5

Ansoff matrix: Product development

Answer 5

Grow by selling new products to your existing market

Do by:
- invest in r&d (not competitive, ur comps have better products)

• buy the rights to someone else’s product
• bring out new product updates (makes old one seem less desirable, ex. iPhone 6,7,8)

Question 6

Ansoff matrix: diversication

Answer 6

Grow by offering new products new market segments

Two types:

Related diversification- new markets/ products you create share similarities to your old products or services

Unrelated - completely new products or markets to completely new products or markets

Question 7

Process of mergers and acquisitions

Answer 7

Indentify candidates - mkt share, growth opportunities, rep, corporate fit

Candidate selection- initial contact, meeting to discuss openness of m&a

Letter of intent

Purchase agreement

Die diligence

Question 8

Post mergers and acquisitions

Answer 8

Integration planning and communication - internal (why? What does it mean for me?)
- priority external (customers, partners..etc)
- external ( general public and industry )

Transaction

Post transaction transition and communication

(Who should know? When?)